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Lao PDR Market Access Guide: Trading with ASEAN Dialogue Partners – People’s Republic of China

Lord, Montague J. (2013): Lao PDR Market Access Guide: Trading with ASEAN Dialogue Partners – People’s Republic of China.

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Abstract

China is the second most important export destination of Laos, and export growth to that market has far outpaced exports to Thailand, the leading export destination. One of the major drivers of this growth is the comprehensive ASEAN-China Free Trade Agreement (ACFTA) under which Lao benefits in trade of goods and services and in investment measures.

How Lao Producers and Exporters Benefit from ACFTA:

- ACFTA’s Trade in Goods Agreement has already eliminated tariffs on 90% of its products imported by China. Tariffs on the remaining 10% of imports, classified as sensitive products, are being reduced at a slower pace.

- Without preferential market access, other foreign suppliers to China are subject to an average tariff of over 8%. This high level of protection gives Lao businesses a large competitive advantage over competitors who are not ACFTA members.

- For agricultural products, China’s average tariff is 65% for non-ACFTA member countries. Lao businesses therefore have a huge competitive advantage in agricultural exports over countries that are not part of the Agreement.

- Laos’ proximity to China makes it easier to transport goods to that country than from other ACFTA member countries, especially with the planned development of transport infrastructure between the two countries. Moreover, China’s logistics environment is relatively favorable to trading.

- China is one of the fastest growing markets in Asia. Two-way trade between China and ASEAN increased by nearly 30% in 2011 and is targeted to expand by another 20% by 2015. In the case of the Lao PDR, the trade expansion has been much higher. In the last five years, Lao exports to China have grown by an average of 80% a year and that rapid expansion is expected to continue in the coming years.

This study covers the operation of the Agreement and its parts related to rules of origin, opportunities of Lao businesses, how to gain access to the market, and useful contacts and resources.

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